I'm not an entrepreneur yet (one day!), but keep on understanding the attributes that lead to the success or failure of startups. I was reading an article in the Entrepreneur magazine that beautifully summarizes the top 10 mistakes that threaten startups (written by Paula Andruss).
Most of the entrepreneurs fall prey to common mistakes, some learn, but others do not. One must be watchful about the following:
1. Not prepping your life:
You have to be ready yourself, mentally and physically. If it were easy, everyone would do it. You should have your family and friends onboard, and set expectations with them. Your work-life balance will suffer. If you are not ready, then don't do it.
2. Confusing a product with business:
Your product can solve an individual need, but it's a business model that will make customers come back again. Business has to have a recurring revenue stream. Your product must have its roadmap and support structure to deliver to your customer expectations. Additionally, you must know what your product and business would look like in three to five years; an investor would ask for it.
3. Not paying for expertise:
Entrepreneurs can claim they are good at everything, but they are not. Every part of your business should be done expertly. It's better to find a resource which is good at it. You will otherwise be wasting your time on something that could be done a lot better by an expert, and you can focus on the right things for your business. Funding at times is an issue, but you can be creative on how to bring an expert on board.
4. Ignoring data:
I love the statement made by one of the Co-Founders of a San Francisco based company 'Magical thinking can kill any business.' You can't just believe you will succeed; data insights, market analysis, and number crunching must happen.
5. Scaling too quickly:
Analysis says: Seventy-four percent of high-growth internet startups failed because they scaled too fast, too soon. People raise money and spend it on wrong things. When they realize, it's often too late. One should focus first on generating more revenue with right and limited investments.
6. Clinging to the wrong idea:
Don't go on gut, go on evidence. When you hit the brick wall, and nothing is changing for 6-12 months, and none of the best practices are working, there is something wrong with your business idea.
7. Failing to delegate:
Entrepreneurs like to control and wants to take care of their product or business themselves. The best approach is to create a process, define how things should be done and delegate. If you're overwhelmed and tries to hire someone to help you, it will still fail. You need to delegate to avoid being in the state of being overwhelmed. Just hiring someone won't help.
8. Thinking money solves everything:
Your business model has to be sound, only then throwing money would help. Doing it the other way will only get you in trouble.
9. Underestimating how long sales take:
Sales take time. Entrepreneurs think that they might land a big enterprise account in six months but in reality, it can take more than a year. Your business plan must take this into account (your burn rate and cash flow).
10. Fearing failure:
There isn't any term as 'failure.' It's always about an experiment that will improve your next business, it's learning. You must change the mindset and start taking some risks!